DOW Jones & Co will launch a new stock index today dedicated solely to small and medium-sized companies. Having seen shares of small and medium-sized companies listed on the Hong Kong Stock Exchange lose nearly half their value in the past 15 months, Dow Jones thought it necessary to come up with a tool to closely track their movement. The new index - to be called the Dow Jones Hong Kong Small Cap Index - will use December 31, 1993, as its base level of 100. It is common for new indices to choose fictitious dates as a starting point against which subsequent price movements are measured. At its launch this morning, the Dow Jones benchmark shows typical values of small to medium-sized stocks having shed 48 per cent since that date. In the same period, the Hang Seng Index of big blue-chip stocks has fallen 29 per cent. Until now, the performance of smaller stocks has been difficult to gauge. Other well-known local indexes, including the All Ordinaries Index, are dominated by major companies. Dow Jones now hopes its new index will serve as benchmark for the growing number of institutional investors and mutual funds interested in small businesses. The index is based on 100 component stocks, all of them listed on the Hong Kong exchange for at least 12 months. Their market capitalisations range from about $385 million to $5.8 billion. And they were selected from a potential field of about 300 stocks, with priority given to those with the highest levels of liquidity. Dow Jones says the list of component stocks will be reviewed twice yearly to determine possible deletions and replacements, to keep it reflective of current market trends. The Dow Jones Hong Kong Small Cap Index is the latest addition to an expanding tool kit of market barometers from Dow Jones. Dow Jones is considering more specialised indexes in addition to expansion of the world index to include additional countries. The oldest and best-known tool in its portfolio is the Dow Jones Industrial Average in the US, which tracks 30 blue-chip stocks of large US companies and was first computed in 1885.